China's Sinopec takes over Addax for 7.56 billion

By IBT Staff Reporter On 08/18/09 AT 1:50 PM

Sinopec Group, China's largest oil refiner, has completed its $7.56 billion acquisition of Swiss oil explorer Addax Petroleum Corp., which has a large presence in West Africa, marking China's biggest foreign takeover to date.

Addax, based in Geneva, has oil and gas exploration and production operations mainly in West Africa and the Middle East. It jointly operates the Taq Taq field in Iraq's self-ruled Kurdish region with Turkey's Genel Enerji.

State-owned Sinopec Group is the parent of Sinopec Corp., Asia's biggest refiner by volume. It says the acquisition will expand its production capacity to profit from rising crude prices that have cost it billions of dollars in recent years due to government caps on retail fuel prices.

Addax is China's biggest foreign corporate takeover but the deal is half the size of last year's $14.3 billion acquisition by Aluminum Corp. of China, with Alcoa Corp., of a 12 percent stake in global miner Rio Tinto PLC, according to financial information firm Dealogic.

The Swiss oil explorer posted an 87 % drop in second-quarter profit as crude prices tumbled from near-record levels a year ago.

Excluding oil production from the Kurdistan region of Iraq, Addax expects annual average working interest gross oil production for 2009 to be between 132,000 barrels per day and 137,000 barrels per day.

Addax, which is listed on exchanges in London and Toronto, says Sinopec promised to keep Addax's top management intact, according to Association Press.